An Intro to Financial Independence

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Welcome to Chocolate and Money! It is amazing to have you here! If you are asking yourself: “What is financial independence?”, then this is the right place to be.

Whether you are new to personal finance or already have a basic understanding of financial independence, I hope that these six letters will give you value and put you on the right path towards a financially free future.

These six letters summarize my view and philosophy towards finances and money. They were originally written for my sister when she was about to enter the work-force and provide the absolute basics that you should understand. 

It is my great hope that these will give you the tools to create and determine your own personal and financial future, both in the short- and especially the long-run. The ultimate goal is to show you how to increase on the chocolate aspects of life (aka the things that give you value and make you happy) while at the same time improving the money aspects of life (aka making sure you have more money).

It is all about making sure that you have the money aspect figured out, for you to fully focus on the chocolate moments of life.

Let’s start and dig right into the spicy stuff. As we are talking about personal money, naturally my first question must be:


After reading this question, what are your emotions? Shock, disgust, disdain? Are you thinking that I am a typical business student who only cares about money, careers and power? Are you afraid that I am one of those monsters without values, morals and emotions?

Don’t fret me. These letters will not try to make you rich or tell you that driving a Ferrari is the ultimate goal of our lives. What I hope is that these letters will show you how to deal with money in order to spend more time with the things you value most in life.

In short, these letters will teach you how to become financially independent.

What Is Financial Independence?

What exactly do I mean by being financially independent? Well, to me it is the point in your life where you have enough money saved up so that you are not dependent on anyone else anymore from a financial point of view. Put in other words:

You do not have to work another day in your life, if you do not want to.

Now you might be asking yourself whether this is really feasible, what level of money you would have to have in order to never have to work again or whether Mr C&M just went bonkers and actually these letters were written by a “Nigerian Prince who just happened to stumble across USD 50 mio lying around and chose you to share them with if you enter into a once in a life-time business deal”. 

I can promise you that I will answer all your questions and that I have not turned into any kind of prince.

Before going into details, I want to highlight one key point to keep in mind: I cannot teach you to get rich overnight. The tools I will show you are part of a medium to long-term strategy. If you are looking for a get-rich-quick situation, then I suggest going to Vegas and putting all your money on black or marrying a rich oligarch from Russia. The whole idea behind the process I am describing, is to make many small good choices, again and again. Like a snowball rolling down a hill, these small choices will add up and multiply each other until you have one huge snowball rolling you straight into financial independence.

“Hard choices, easy life. Easy choices, hard life.”– Jerzy Gregorek

Introducing: Nice Guy Andy and Bad Ass Mike

To start everything off, let me introduce you to two fictional characters: Nice Guy Andy and Bad Ass Mike.

Nice Guy Andy is a simple guy who works as a biology teacher at a private school in a small suburb of Zurich. He is 32 years old and loves the work he does. However, he cannot imagine working until 65 and dealing with those administrative meetings and difficult parents for another 33 years. 

He loves playing soccer and hanging out with friends, although he also enjoys quiet hikes by himself on the weekends or during his 13 weeks of holidays. He finished his education at 24 and has been a teacher ever since. 

Andy’s annual salary has been CHF 65’000 since he started teaching and has not changed from then. Unfortunately, the school only gives salary increases after 10 years of working at the school.

Bad Ass Mike on the other hand is the upstart, go-getter who works at an investment banking firm and loves the high-life. He drives a big “bad ass” car, he loves going out to party with his friends and he spends his six weeks of holidays in cool places such as Ibiza, St. Tropez or St. Moritz. 

Mike hates his job because of the long working hours (14+ hours a day) and the constant pressure from his bosses. But he wants to “belong” and believes “it will all be worth it in the end”. 

He is the same age as Andy, but lives in a high-end apartment with six rooms in the middle of Zurich. Mike also finished his studies at 24, but started with an annual salary of CHF 100’000 and received a 10% increase every year. Currently he has a salary of a little less than CHF 195’000 per year.

Impact of salary and financial independence

Two different people, with two very different lifestyles and two significantly different incomes. 

Now the key question is: At age 32, who is richer? 

Nice Guy Andy with a total salary income of CHF 520’000 during his eight years of working, or Bad Ass Mike who earned a whopping CHF 1.14 moil during the same period?

The answer is: It depends!

While our every single lawyer in the world would be proud to hear such an answer, I am sure it leaves you frustrated. Of course, we are missing some key information to answer the above question, most importantly: 

How high are these guys’ expenses.

This time, let’s start with Bad Ass Mike. As you know, he loves the high-life and this translates into nearly every aspect of his expenses as well. With his increase in salary and increase in rank in the investment bank, Mike of course needed to upgrade his apartment every two years. 

And because he considers himself a big-shot, a normal car was not enough. First, he bought a car for CHF 40’000 at age 27 and then upgraded to a sports car for his 30thbirthday for CHF 70’000. 

Living in Zurich, he does not necessarily need a car, but Mike wants to show his friends and family that he is successful. The car is perfect for this purpose. 

Also, Mike loves the good restaurants of Zurich, be it for a meal with business partners, friends or the ladies. Of course, he is a serial dater and wants to impress the “weaker sex” by taking them out to the most exclusive places in town. He also hopes that this will help him meet a future business partner / colleague / investor at one of these high-end places. The same is true for Mike’s holidays, where he normally goes on vacation with the more senior colleagues at his firm to the most expensive locations in the world. But hey, if you do not join them, then you are not part of the inner circle and being part of the inner circle is key for success (at least that is what Mike is thinking).

Example of Expenses: Bad Ass Mike

Nice Guy Andy takes a different approach to life. 

He spent the first two years of his working career living with his parents. This saved him quite a bit of money on his rent. Then at the age of 27 he decided to rent a small apartment for CHF 600 per month. 

On the food side, he always cooks by himself and invites his friends for dinner rather than going into the city to a restaurant. He prefers the atmosphere at home and likes the added benefit that for every invitation, he gets invited back at some point in the future. 

For holidays, he spends time abroad once per year in a European country, mainly during spring or fall break in order to avoid the high prices in summer. During summer break, he makes use of the family house they have in the mountains. 

Andy does not own a car as he bikes to work every day. He generally replaces it every two to three years.

Example of Expenses: Nice Guy Andy

Let’s go back to the original question: Who is richer? Nice Guy Andy or Bad Ass Mike?

Despite Mike earning over double the income compared to Andy during the same eight years, Andy managed to accumulate more than 5.5 times the savings of Mike (CHF 247’800 vs CHF 44’371). This difference is gigantic! How did he do it? 

By keeping his expenses low.

Just look at the difference in savings rates. 

Mike starts off at a good 30%, but then continuously upgrades his lifestyle year after year. His upgrades in lifestyle are even larger than his promotions and by the age of 32 he is only saving 2% to 4% of his total income. In the years where he bought cars, his savings rate is even negative. 

Andy on the other hand has a super consistent savings rate of 45% of his income, except for the first two years where he did not have an apartment. This is why he was able to save so much more than Mike, despite earning less than half of Mike’s income.

Surviving A Crisis: Financial Resilience

Let’s take this scenario even one step further. At age 32, both Mike and Andy have jobs and are earning an income. Neither of them is really worried about their personal finances, because both have a consistent salary and some savings.

Suddenly an economic crisis hits. The president of the United States injected himself and his entire cabinet (incl. the Vice-President) with an injection of disinfectants to rid himself of a virus. They all die. 

The president’s back-up plan, his own son-in-law, cannot withstand the pressure and quits after just three weeks in office. The markets go crazy, it is absolute mayhem and a huge economic recession starts. 

Mike gets fired, because his bank’s large clients stop investing money. The private school Andy works at gets less registrations for new students, because people cannot afford private school anymore. They let Andy go with the promise that he will be the first person they will contact once registration numbers go back up again.

Without any income, who can survive longer without losing all their money and going bankrupt? Bad Ass Mike or Nice Guy Andy?

Let’s take a closer look at the expenses of these two guys again.

Bad Ass Mike has annual living expenses of roughly CHF 187’000 of which CHF 39’000 are taxes. As he has no more income, he does not have to pay these anymore. 

Let’s assume that Mike decides not to go on holidays for the moment and at the same time cuts back drastically on food expenses (i.e. they go down by CHF 32’000 to CHF 8’000 per year). Similarly, he manages to cut his “other expenses” to CHF 4’000. 

However, Mike does not want to downgrade his apartment. He has been accustomed to a certain lifestyle and is afraid that his colleagues will look down on him for living in a “peasant” apartment. 

With all this cost cutting, Mike can reduce his annual expenses to around CHF 78’000. Given his savings of CHF 44’371, he will be able to survive for around a half a year without having to take a loan or going bankrupt. 

Now let’s look at Nice Guy Andy. He has annual expenses of CHF 35’700, including taxes. Removing the taxes, he has actual living costs of CHF 22’700. 

Most probably Andy could cut back even more, but he is happy with his current lifestyle and confident that he will be able to get a new job within a year. Given his savings of CHF 247’800, Andy could survive for nearly 11 years. 

11 years vs a half a year! That is an unbelievably huge difference.

What can we learn from this scenario?

Reducing your expenses does not just help you to increase your savings, it also helps you survive longer in case of a dramatic event, such as losing your job. Understanding this aspect is crucial to understanding how to define financial independence. Andy could survive for 11 years without having a job, whereas Mike would not even survive seven months. Andy is therefore much more financially independent than Mike. We conclude: 

Raising your income only helps you save more money, if you keep your expenses constant. 

Reducing your expenses always helps you 1) save more money and 2) be financially more resilient.

The Twin Sister: Smart Pants Susan

One question which remains is that of what to do with your savings. Buying the 10thLouis Vuitton bag or a Rolex watch is not a good option, because it increases your expenses. Of course, you could just convert everything into gold and bury it in your back yard for a rainy day. 

To answer the question better, let me introduce you to a new fictional character in our story: Smart Pants Susan. She is the twin sister of Nice Guy Andy and followed the exact same path as he did, except that she teaches math. In short, she has the same income, same expenses and same savings.

Smart Pants Susan realized that she did not know whether it made sense to just leave her money in a bank or hide it in her back-yard, so she started reading a lot of books on investing in the stock market. 

After much consideration, she decided to invest all her savings into a low-cost index fund such as the MSCI World Index Fund, which has returned an average rate of return of 7.23% per year since its inception in 1987. 

Nice Guy Andy on the other hand put all his money into a savings account with an interest rate of 1%. Don’t worry if you do not know what an index fund is at the moment. We will get to it in Letter 3 of this series.

Let’s assume that the index fund Susan invested in returned 7.23% every year for all eight years and that Andy always received 1% on his savings. That means for every CHF 100 saved, Susan received CHF 7.23 per year and Andy received CHF 1 per year. 

From this you will already know that Susan is going to have more money at the end of the eight years than Andy. But the question is how much more? 

Impact of investing and financial independence

That is a humongous difference of CHF 67’415 or 26% of Andy’s total savings. I guess Smart Pants Susan deserves her name and I strongly assume that she is walking around in dollar shaped sun-sunglasses. 

This example illustrates the last lever which you should understand when it comes to personal finance: Investing.

The Three Levers of Financial Independence

To be successful in personal finance and to understand what you can do to accelerate your journey to financial independence, you need to understand the three levers of financial independence:

Income, Expenses and Investing.

Once you understand the basic concepts behind these three levers and how you can implement simple strategies to make use of them, you will be on the right track towards financial independence.

I hope you are clearer now on the original question of “What is financial independence?” and understand the basic three levers behind it. My next three letters will each focus on one of these levers, starting with expenses, then followed by investing and finally income.

I hope this letter has given you a first taste of the topic surrounding personal finance and financial independence. The FI (financial independence) bug has caught me and I hope it will catch you as well.


Mr C&M

Actionable Items

Take a pen and paper and note down the following:

  • 1. Without thinking too much, how much money do you think you need so that you never have to work another day in your life?
  • 2. Without thinking too much, how high are you average monthly expense (best estimate)?
  • 3. If starting tomorrow, you would never have to work again, what would you do for the rest of your life?

Do you have any questions, concerns, feedback or constructive criticism? Let me know in the comments or send me an e-mail at Anything is highly appreciated.

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